DUNLOP RUBBER COMPANY LTD Vs. INCOME TAX OFFICER A WARD
HIGH COURT OF CALCUTTA
DUNLOP RUBBER COMPANY LTD.
INCOME-TAX OFFICER A-WARD
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T.K.Basu, J. -
(1.) The petitioner is a company incorporated in the United Kingdom. The petitioner-company has a subsidiary in India, viz., Messrs. Dunlop Rubber Company (India) Ltd. (hereinafter referred to as "the Indian company"), which is incorporated under the Indian Companies Act and has its registered office at 57B, Free School Street, Calcutta.
(2.) The Indian company does not maintain any research organisation in India. The petitioner-company maintains in the United Kingdom extensive technical research and similar departments which function as service departments for the entire Dunlop organisation throughout the world. The expenses of these departments are allocated over all Dunlop factories partly on the basis of volume of production in each factory and partly on the basis of specific services rendered.
(3.) Clause 5 of the inter-company agreement between the petitioner-company and the Indian company, which is relevant in this connection, provides as follows :
" All costs and expenses incurred by the English company in connection with the communication of information, processes and inventions and/or the grant of any licences as aforesaid and/or the giving of any advice or assistance provided for hereunder by the English company to the Indian company shall be paid by the Indian company. The Indian company shall also pay to the English company a proportionate part of the costs and expenses (including salaries and general research and development expenditure) incurred by the English company in the acquisition, discovery and development of such information, processes and inventions. Such proportionate part of the said costs and expenses shall be mutually agreed or failing agreement shall be fixed by the said Messrs. Whinney Smith & Whinney.";
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